Details regarding GST and its implications

1. PGDIFA

2. ‘G’ – Goods
‘S’ – Services
‘T’ – Tax
“Goods and Service Tax (GST) is a comprehensive
tax levy on manufacture, sale and consumption of
goods and service at a national level.
GST is a tax on goods and services with value
addition at each stage having comprehensive and
continuous chain of set-of benefits from the
producer’s/ service provider’s point up to the
retailer’s level where only the final consumer should
bear the tax.”

3. Tax Structure
Direct Tax
Income Tax
Wealth Tax
Indirect Tax
Central Tax
Excise Service Tax Customs
State Tax
VAT
Entry Tax,
luxury tax,
Lottery Tax,
etc.

4. Tax Structure
Direct Tax
Income Tax
Wealth Tax
Indirect Tax =
GST (Except
customs)
Intra- state
CGST
(Central)
SGST (State)
Inter State
IGST
(Central)

5. GOODS AND SERVICE TAX
STATE LEVELCENTRAL LEVEL
It may subsume :
• Central Excise Duty
• Additional Excise Duty
• Service Tax
• Counterveiling Duty
• Additional Duty of Customs
• Surcharge
• Education cess/ SHEC
It may subsume :
• VAT/ Sales Tax
• Purchase Tax
• Entertainment Tax
• Luxury Tax
• State surcharge &
cesses

6. Goods
+
Services
Manufacturer
Wholesaler
RetailerConsumer
Government
and Banks

7.  Pricing, costing, margins
 Supply chain managements
 Change in IT-systems
 Treatment of excluded sectors
 Treatment of tax incentives
 Transaction cost
 Tax compliance

8.  Low compliance cost
 Simple business processes
 Less requirement of automation initially
 Minimal ITC refund cases
 Exemptions instead of exclusions from GST
 Seamless flow of input credit
 Seamless flow of information between
supplier, buyer and tax administration
 Need for IT portal or agency like NSDL,
TINXSYS
Contd…

9.  Self policing
 Ease of compliance
 Automation of processes by way of e-
registrations, e-returns and e-payments
 No requirement of verification in inter-state
movement of goods
 Zero rating of supplies to exporters
 Administrative efficiency in case of assessment
and adjudication

10.  Dual model GST under federal structure i.e.
CGST and SGST
 Elimination of cascading effects of the taxes
 CGST & SGST to be charged on the same price
 Set-off relief fully captured
 Destination based tax structure
 Free movement of goods & services throughout
the country
 Application to all transactions of Goods &
Services with some exceptions
 Inter State GST (IGST) – new model for Inter
state transactions
Contd…

11.  Input tax credit (ITC) for the CGST/SGST and
could be utilized for payment of CGST/SGST, but
cross utilization not allowed, except IGST
 Refund for unutilized ITC will be discouraged
 Threshold limits will be on higher side
 Common Returns formats for CGST & SGST
 No exemption/remission of Tax to industry
 State will be empowered to Tax services
 It will also improve the international cost
competitiveness of native goods & services

12. Benefits to assessee
 Reduction in multiplicity of taxes
 Mitigation of cascading/ double taxation
 More efficient neutralization of taxes especially for
exports
 Development of common national market
 Reduction in the tax outflows in the hands of the
consumers
 Simpler tax regime –
o Fewer rates and exemptions
o Conceptual clarity (Goods and services)

13.  Simpler tax system
 Broadening of tax base
 Improved compliance and revenue collections
in state and centre (tax booster)
 Efficient use of resources
 Enhancement in the competitiveness of
exports

14.  Could cut freight times by 20-30%
 Could cut logistics costs by even
higher i.e. 30-40%
 Boost India’s key manufacturing
sectors by 3-4% of net sales
 Help India to return to high growth
path
 Enabling large-scale job creation

15.  Legacy issues which will use resources
 Non-harmonization of tax rates
 Lack of procedural manuals
 Lack of skilled officials
 Lack of automation
 Lack of cross verifications with other tax
administrations
Contd…

16.  No system for 100% scrutiny of tax
returns and tax audit
 Poor quality of tax returns
 Double registration – Handling old
registration
 Lack of mechanism to control tax
evasion
 Impact on prices

17.  Tax planning
 Tracking GST development
 Industry advocacy
 Review of draft legislation and impact analysis
 Review of final legislation and impact analysis
 Implementation assistance
 Post implementation support
 Record keeping
 Departmental audit

18.  The base should be extended to all goods and
services including immovable property, Banking
services, goods & passengers
 There should be a single low rate
 There should be destination based
 The tax should be designed on invoice-credit
method
 Full and immediate input tax credit in respect
of capital goods
Contd…

19.  There should be seamless flow of tax through
all stages of production and distribution so as to
stick on “final” consumption
 The exports should be zero rated and imports
should be fully taxed
 There should be a threshold exemption for
small dealers
 Full computerization of the compliance and
administrative systems
 The GST must replace all transaction based
taxes on goods & services and factors of
production

20. Common GST
Portal
(Reconciliation
system)
Taxpayer
State 1Portal
State 2 Portal
State N Portal
NSDL
MCA CBDT
CBEC
(Central
Portal)
Banks and RBI
Send Challan
Upload Challan
Details
File Returns
CGST and
IGST Returns
SGST and
IGST Return

21.  Rates and policy issues of VAT
 Emerging issues :
• Bit coins/coupons
• B2C
• Online supply of transactions
• E-commerce transactions
• Dispute settlement between states
• Exclusions
• Revenue Neutral Rates (RNR)